The Missing Billionaires: A Guide to Better Financial Decisions

Description

An Economist Best Book of the Year "Making Money and Keeping It" – The Wall Street Journal Over the past century, if the wealthiest families had spent a reasonable fraction of their wealth, paid taxes, invested in the stock market, and passed their wealth down to the next generation, there would be tens of thousands of billionaire heirs to generations-old fortunes today. The puzzle of The Missing Billionaires is why you cannot find one such billionaire on any current rich list. There are a number of explanations, but this book is focused on one mistake which is of profound importance to all investors: poor risk decisions, both in investing and spending. Many of these families didn’t choose bad investments– they sized them incorrectly– and allowed their spending decisions to amplify this mistake. The Missing Billionaires book offers a simple yet powerful framework for making important lifetime financial decisions in a systematic and rational way. It's for readers with a baseline level of financial literacy, but doesn’t require a PhD. It fills the gap between personal finance books and the academic literature, bringing the valuable insights of academic finance to non-specialists. Part One builds the theory of optimal investment sizing from first principles, starting with betting on biased coins. Part Two covers lifetime financial decision-making, with emphasis on the integration of investment, saving and spending decisions. Part Three covers practical implementation details, including how to calibrate your personal level of risk-aversion, and how to estimate the expected return and risk on a broad spectrum of investments. The book is packed with case studies and anecdotes, including one about Victor’s investment with LTCM as a partner, and a bonus chapter on Liar’s Poker. The authors draw extensively on their own experiences as principals of Elm Wealth, a multi-billion-dollar wealth management practice, and prior to that on their years as arbitrage traders– Victor at Salomon Brothers and LTCM, and James at Nationsbank/CRT and Citadel. Whether you are young and building wealth, an entrepreneur invested heavily in your own business, or at a stage where your primary focus is investing and spending, The Missing Billionaires: A Guide to Better Financial Decisions is your must-have resource for thoughtful financial decision-making. Review: Interesting but more formula’s then expected - Very interesting read but more formulas and less concrete advice of how to build the optimal long term portfolio Review: The best finance / personal finance book I've ever read. And that's saying something! - What an absolutely amazing book. As the authors say "There are millions of books out there telling you what to invest in, but nothing out there telling you how much to invest in any particular investment or all your investments". That was a revelation. I'm so endlessly bored with books / social media / networks / etc telling you to buy stocks or to not buy stocks or to buy particular stocks or to buy gold or oil or bitcoin, etc, etc. It was Amazingly Refreshing to read a book that offered a precise roadmap towards how much to invest in anything or everything with some modeling and mathematical precision behind the suggestions. A must read for anyone who cares about their money!! And a fun read too, not dry at all!!!!